Questions linger for business users about new CRTC wireless code

Chris Farrer, manager of telecommunications at Ritchie Bros. Auctioneers, says new wireless rules will likely affect consumers and small businesses more directly than large enterprises such as the auctioneer.

Photograph by: Steve Bosch
, Vancouver Sun

Small business operators might benefit from the CRTC “wireless code” announced Monday but it looks like business as usual for large companies that buy voice and data access in bulk.

The rules limit to two years the length of a new contract with no cancellation fee although the cost of the phone itself must be paid out. The CRTC also announced a $50 monthly cap on extra data charges (customers must be notified of further charges) and a $100 monthly cap on international roaming without notification.

Chris Farrer, manager of telecommunications for Ritchie Bros. Auctioneers, expects few changes in the contracts for approximately 450 Canadian employees of the company, which conducts a globe-spanning enterprise from headquarters in south Burnaby.

“I think this might affect the consumer directly, a little more than it would for us. My group corporately right-sizes plans constantly so for us I’m not sure that we are going to see any of the benefits,” Farrer said.

“We have corporate relationships with the major carriers in Canada and the United States. We sign a 36-month agreement (in Canada) and we receive a device at a reduced cost based on that agreement.

“In the U.S., it’s different. They do 24 months and you get a reduced device but there’s no opportunity to renew until your next contract is up. In Europe you buy a phone and you buy a contract — and they’re completely separate.”

As the guy who budgets for telecommunication costs, Farrer likes the new data and voice cap rules.

“That sounds fantastic because you can imagine a company like ours, we’ve got people internationally travelling all the time and it’s not uncommon to see an invoice that we would budget $100 a month for someone’s cellular service and it could easily to go to $1,000.

“That’s really hard to budget when you are 10 times over budget on one month and it’s all based around international travel, data and voice and texting.”

He already likes the customer service he’s getting from Canadian carriers.

“The Canadian carriers that we work with are excellent business partners, and that’s why we chose them. I expect to get calls probably today or tomorrow from both carriers who say, ‘Hey Chris, this was just announced. This is how we see it rolling out.’ They’re Canadian companies. We’re a Canadian company. We see and hear from them all the time.”

Farrer dismisses critics of Canada’s wireless industry who suggest customers in this country overpay for service compared to the U.S.

“I would say in fact our Canadian users probably spend less, monthly, than our U.S. users.

“But the difference is that in the U.S. they already have 24-month contracts and they have national rate plans. So basically if you have a cellphone and you are from Los Angeles you can go anywhere in the continental United States and you are assured that at the end of the month you are still going to get that same bill.”

Scotiabank telecom analyst Jeff Fan commented in a note to clients that the code is “the appropriate way for the government to regulate the industry” rather than persisting with a failing plan to incent more carriers to compete in the Canadian mobile market.

Virtually all recent entrants are getting scooped up by the big three after struggling to gain market share.

Fan raised the possibility that the cost to acquire a new phone might go up after Dec. 2 as the code eliminates 36-month terms as an option for new contracts. With just 24 months in which a carrier such as Telus, Rogers or Bell can recover the cost of the smartphone, “we expect carriers will raise handset prices for 2-year contracts and lower subsidies,” Fan said.

“That’s something we’re going to have to figure out over time here, and we will deal with it,” Ted Woodhead, senior vice-president of federal government and regulatory affairs for Telus, said in an interview. “Currently we offer two- and three-year terms. Customers overwhelmingly take three-year terms, I assume because the device comes at a lower cost.”

“We operate in a competitive market and we don’t know how the market will respond to this, so I wouldn’t want to speculate at this point in time what that means.”

Woodhead doesn’t expect the code will change costs for large business operators such as Ritchie Bros.

“It only applies to consumers and small businesses,” he said, adding that Telus has already adopted many of the contract changes ordered by the CRTC.

“All of these customers currently get all of these other things. We already today unlock phones. The decision doesn’t mean anything to us because we already do that for a fee, which the decision allows. In fact we have one of the cheapest fees in the industry.

“Our business practices have (already) gone there, just as a market response.”

Rogers Communications representative Luiza Staniec said the company thinks “one national code is great news for our customers overall because consumers will be treated equally across the country.

“And also, Rogers already has been implementing a lot of these changes in many areas that are included in the code including easy-to-calculate cancellation fees, or device unlocking on subsidized devices,” Staniec added.

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Chris Farrer, manager of telecommunications at Ritchie Bros. Auctioneers, says new wireless rules will likely affect consumers and small businesses more directly than large enterprises such as the auctioneer.

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